Reference no: EM132726211

Question - ABC Company is in the process of adjusting the books at the end of 2X16. The accounting records revealed the following information:

The entity failed to accrue sales commissions at the end of 2X14 and 2X15 as follows:

2X14 220,000

2X15 140,000

In each case, the sales commissions were paid and expensed in January of the following year.

Errors in ending inventory for the last three (3) years were discovered to be as follows:

2X14 400,000 Understated

2X15 540,000 Overstated

2X16 150,000 Understated

The unadjusted retained earnings balance on January 1, 2X16 is P12,600,000, and the unadjusted net income for 2X16 was P3,000,000.

Dividends of P1,750,000 were declared during 2X16.

Required - Compute for the following: (please show the explanation and explanation)

A. Adjusted net income for 2X16

B. Adjusted retained earnings for 2X16